Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Managing multiple funds for IRA or have just one?
Old 03-25-2010, 09:15 PM   #1
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 52
Managing multiple funds for IRA or have just one?

Currently I have 2 funds (both equity) for my IRA and am thinking about adding more, but the overhead of managing them in the long term is a concern to me.

I have one Vanguard one and one from Wells Fargo (they bought out Strong investments which I opened up this fund with a few years back and their expense ratio is quite high which I can't stand). Performance is not bad, but am feeling a tug to just do one target fund.

At the same time, I could probably just do the asset allocation better myself by adding more funds in (for bonds, etc). But I could end up with like 5-7 funds and then one day I will need to probably roll them over one by one anyway just to consolidate.

Any thoughts about this?
__________________

__________________
wilkens21 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-25-2010, 09:21 PM   #2
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,887
Investing in one target fund is a perfectly valid investment strategy, especially if you have a long time between now and retirement.

It sounds to me like you would really prefer the "set and forget" aspects of a target fund.
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 03-25-2010, 10:29 PM   #3
Full time employment: Posting here.
 
Join Date: Jan 2007
Posts: 582
DH and I each have multiple funds in our IRAs (some Vanguard, some T Rowe) and I haven't found it to be that big a deal as far as management. But I admit I naturally tend to be very organized and I also prefer the control that comes with being able to independently buy and sell different asset classes. Also we are still in the accumulation phase, so maybe I'll feel differently when I have to figure out how to do the withdrawals. But right now I'm not necessarily expecting to consolidate later, as you mention.

If multiple funds aren't appealing to you right now, I agree with W2R that there's nothing wrong with target funds. I suggested them to my mother-in-law who didn't want to deal with details and it's worked out well. Plus, you can always start with the targets and add other pieces later if you want.
__________________

WM is offline   Reply With Quote
Old 03-26-2010, 06:45 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,643
Several Vanguard (DW self directed IRA), Several Fidelity (DW work 401K), TSP, plus several Vanguard taxable. It isn't that big a deal to juggle several. I track them all on a Google Docs spreadsheet that downloads current prices whenever I open it. We will need to be careful when RMDs come along but still no big deal.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 03-26-2010, 06:32 PM   #5
Full time employment: Posting here.
 
Join Date: Jan 2007
Posts: 582
Quote:
Originally Posted by donheff View Post
I track them all on a Google Docs spreadsheet that downloads current prices whenever I open it.
How do you do this? Even for the TSP? I would like to do this but didn't want to set up something with Yahoo finance or other trackers.
__________________

WM is offline   Reply With Quote
Old 03-27-2010, 06:56 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,643
Quote:
Originally Posted by WM View Post
How do you do this? (track in Google spreadsheets) Even for the TSP? I would like to do this but didn't want to set up something with Yahoo finance or other trackers.
For each fund you enter the ticker symbol and in an adjacent cell you enter the close yesterday function referring back to the ticker cell. For example, if the ticker is in C7 you could track price in C8 as "=GoogleFinance(C7;"closeYest"). In C9 you could track the total for the fund by multiplying C8 * whatever cell you have the #shares in. I learned this from someone here.

This doesn't work directly for the TSP since they don't have a public ticker to follow (at least I can't find it). I use tickers for similar Vanguard funds as a proxy and correct the #shares every quarter or so to ensure that the fund total matches the actual TSP value. Between corrections it tracks pretty well -- close enough for Government work
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 03-27-2010, 11:15 AM   #7
Full time employment: Posting here.
 
Join Date: Jan 2007
Posts: 582
Quote:
Originally Posted by donheff View Post
For each fund you enter the ticker symbol and in an adjacent cell you enter the close yesterday function referring back to the ticker cell. For example, if the ticker is in C7 you could track price in C8 as "=GoogleFinance(C7;"closeYest"). In C9 you could track the total for the fund by multiplying C8 * whatever cell you have the #shares in. I learned this from someone here.

This doesn't work directly for the TSP since they don't have a public ticker to follow (at least I can't find it). I use tickers for similar Vanguard funds as a proxy and correct the #shares every quarter or so to ensure that the fund total matches the actual TSP value. Between corrections it tracks pretty well -- close enough for Government work
Interesting! I see how I'm going to be spending some time this weekend... thanks!
__________________

WM is offline   Reply With Quote
Old 03-29-2010, 12:48 PM   #8
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 52
thanks for the responses. I'm actually not a big fan of the target funds since they are pretty opaque to me in terms of their investments (at least to me), but the Vanguard/T Rowe Price ones might be a choice one day for me.

How is dealing with the IRS when it comes time to withdraw from multiple funds? Since I only have traditional (non-roth/non-deductible) IRAs, is it a nightmare to keep track of what the earnings were compared to what you put into the fund? Or does the mutual fund company keep track of that in terms of what you're actually taxed on during withdrawal time.

I guess what I want to ask is if you have a bunch of funds and you roll over some to others over the course of time, then how do you keep track of what you will ultimately get taxed on when a distribution does happen? What you put in vs. what the fund has actually appreciated. Seems like a nightmare to me. Thanks!
__________________
wilkens21 is offline   Reply With Quote
Old 03-29-2010, 01:02 PM   #9
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
You should first state your risk tolerance and define the risk tolerance... then once you define risks and understand the risks, set up an asset allocation to handle those risks.

Once you choose an asset allocation, then start picking funds (whether a target fund or other funds) to meet the asset allocation.

The number of funds should not be the concern... the asset allocation should.
If you pick a target date fund, but do not knows its allocation, you might be taking more or less risks that you realize.

Focus on asset allocation...
the fund choices take care of themself after that...

for example in my 401k I own 6 funds and company stock...
in wife's 401k she owns 5 funds and company stock
in my Rollover IRA I own 6 funds...
in my Roth IRA I own 5 funds
in wife's rollover she owns 1 fund, and in her Roth she owns about 9 more.

To some people having 32 funds would be overwhelming... but for us we have the same basic allocation in each account, and it takes 5 funds to set that allocation up on even most basic terms...

In general 95% equity and 5% bonds or 100% equity in all accounts.
75% domestic, 25% foreign in all accounts
45% large cap domestic stocks (40% if bonds are held)
15% domestic mid cap
15% domestic small cap
15% foreign large cap
10% foreign small cap or emerging markets
no more than 5% diversified bonds (foreign/domestic/corporate/government/high yield)

Its possible you could build an allocation on maybe 3 funds, probably takes 4 to do this most of the time, and picking 5 makes it easier.

In wife's Roth (9 funds) we build it by sector, not asset class- meaning we buy tech, health care, natural resources, value, growth, emerging markets, africa and middle east and similar to get same 75-25 and 45-15-15-15-10 allocation as the other accounts. This is about 1% of our total investments, so we are aggressive with sectors (for example we were buying banks in 2008 and real estate in 2008, we are still buying real estate now, and are also loading up on health care too). We own all sectors all the time, but we weight what we buy based on current market performance (we buy what everyone else is selling or what is not performing well over last 6-18 months).

Its not the number of funds which you should focus on...
its the allocation of the funds across asset classes which needs most of your attention.
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 03-29-2010, 01:07 PM   #10
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
Quote:
Originally Posted by wilkens21 View Post
thanks for the responses. I'm actually not a big fan of the target funds since they are pretty opaque to me in terms of their investments (at least to me), but the Vanguard/T Rowe Price ones might be a choice one day for me.

How is dealing with the IRS when it comes time to withdraw from multiple funds? Since I only have traditional (non-roth/non-deductible) IRAs, is it a nightmare to keep track of what the earnings were compared to what you put into the fund? Or does the mutual fund company keep track of that in terms of what you're actually taxed on during withdrawal time.

I guess what I want to ask is if you have a bunch of funds and you roll over some to others over the course of time, then how do you keep track of what you will ultimately get taxed on when a distribution does happen? What you put in vs. what the fund has actually appreciated. Seems like a nightmare to me. Thanks!
If some of the traditional IRA deposits are deductible and some are non deductible, you may want to keep the different types in different funds or keep at different custodians- at minimum you need to keep good records for life if you are mixing deductible and non deductible within traditional IRAs.

Its not a nightmare to keep track of money. For most here its a hobby.
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 03-29-2010, 02:51 PM   #11
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 52
yeah sorry to be vague...my risk tolerance right now is that i'm trying to get to 65/35 mix of stocks/bonds. i'm aggressive for my retirement, though not for my non-retirement savings. probably a bit too conservative for the latter to be honest (ie: a bit too much money in savings, that should probably not be there but in some bonds, etc).

currently for my 401k at work, i have a lot of funds and i'm at 93/7 which is a bit too risky and i'm planning to re-allocate pretty soon to at least get to 70/30 at a minimum.

for my IRA's i want to also get to that 65/35 breakdown, but am at 100% stock right now with those 2 funds. i don't mind owning 4-5 funds to get where i need to be, but also don't want to stomach another major downturn like we just had in 2008.
__________________

__________________
wilkens21 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Exchanging Funds within a Roth IRA Chaos Abounds FIRE and Money 11 09-29-2009 06:52 PM
Just opened a Roth IRA :) Opinion on two target date funds in an IRA? Effect FIRE and Money 3 05-12-2008 09:05 AM
Commingle Multiple 401(k) Rollovers into Single IRA or Not? CoolChange FIRE and Money 3 05-01-2007 03:48 AM
Multiple IRA strategies proud_texan FIRE and Money 14 10-22-2003 06:02 AM

 

 
All times are GMT -6. The time now is 11:02 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.